Power Sector: Why Nigeria’s mini-grid regulation is a big deal for other countries [Electricity]

Power, Electricity, Grid, NERC, Rural Electrification, Discos,

By Rolake Akinkugbe-Filani,

Chief Commercial Africa, Mixta Africa (ARM Group).

Oyemaja; Power Sector: Why Nigeria’s mini-grid regulation is a big deal for other countries [Electricity]

I was invited to speak at the International Solar Alliance (ISA) Regional Committee Meeting (RCM) in Kigali, Rwanda early this month to talk about mini-grid development in Nigeria and the regulatory landscape, and I quickly discovered just how much this little-known (at least to non-industry professionals) piece of legislation powered by NERC, REA and other stakeholders back in 2016, had become somewhat of a poster child for mini-grid policy across Africa and the developing world.

What's the big deal you ask?

The seven-year old regulation was released in 2016, and essentially provides guidelines for how developers, DISCOs, regulators, and off-grid communities can work together to push closer to SDG7, universal energy access via mini-grids.

A mini grid is defined as an electricity supply system with its own power generation capacity between 0 kW and 1 MW size supplying power to more than one customer. Mini-grids can be either isolated (standalone) or interconnected (connected to the network).

The policy is not perfect, and currently under review by NERC and other stakeholders for an upgrade. However, in a session chaired by the Rwandan minister of state for infrastructure, Patricie Uwase, I was invited to talk about why Nigeria’s policy on mini-grids had become such an important reference point for others.

Here are the positive areas I highlighted during my submission to African energy ministers and delegates from across the continent..

1. It’s progressive and highly adaptable. That’s the number one hallmark of solid policy. It should be amenable to evolution in light of prevailing economic circumstances.

2. It recognises the importance of scalability in solutions (a key draw for financiers) by providing for both stand-alone mini grids and inter-connected mini grid solutions

3. It recognises the inefficiencies of existing power sector systems and structures; allowing off-grid solar companies for instance to provide services in areas not covered by the grid.

4. It reduces regulatory and licensing barriers, thus promoting ease of market entry by prescribing only registration requirements for projects below a certain threshold- in this case 100kw

5. It places a premium on commercial and financial viability by prescribing a robust asset valuation process for developers to be compensated in the event a DISCO extends coverage to the developer’s project area.

6. It promotes inclusive multi-party solutions by requiring a tripartite agreement between developers, DISCOs and communities for interconnected mini grid projects.

7. It has created an ecosystem that has spurred the development of other complementary policies and initiatives that strengthen the impact of the mini-grid regulation itself. Here are just 3 examples;-In early 2022, the Nigeria Integrated Energy Planning (IEP) Tool was launched by the Federal Government of Nigeria in collaboration with Sustainable Energy for All (SEforALL) with support from The Rockefeller Foundation. The planning tool provides crucial information for project development for off-grid and mini-grid developers.-In a separate initiative, the Government, supported by the UK Foreign, Commonwealth, and Development Office (FCDO), has also embarked on developing a National Integrated Resource Plan (IRP), which is expected to include electricity distribution plans by the DISCOs and aid electrification planning.-In February 2023 The Federal Government signed the Interconnected Mini-grid Acceleration Scheme, IMAS, award grant agreement with eight indigenous Solar Mini-grid developers for the development of 23 mini-grids across eleven states of the federation.

During the event, countries like Rwanda, Burkina Faso, India (the HQ of the International Solar Alliance), Ghana, and others specifically commented on their referencing of Nigeria’s mini-grid regulation in shaping the various policy options their respective governments were considering to enhance electrification in their countries.

Electrification to rural and last mile communities is still a problem in Nigeria. .About eighty 80 million Nigerians are not connected to the grid, and an estimated cost of $91 billion is required for grid extension to them - so mini-grid regulation is absolutely crucial. However, Nigeria's target of increasing its renewable energy share to 30% by 2030 will also be aided by the mini-grid regulation and future versions of the existing policy. Today there are more than 40 active private sector mini-grid developers in Nigeria.

Originally published by Rolake Akinkugbe-Filani on Linkedin

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